2006-06-20 Brambles comes clean on waste management arm (Geoff Easdown)

BRAMBLES pulled off a record private equity deal yesterday by selling a major part of its Cleanaway division in a deal worth $1.82 billion.

Kohlberg Kravis Roberts, an old United States-owned private equity firm, announced that it would buy the local and Kiwi arms of Cleanaway and Brambles' subsidiary Australian Industrial Services for cash.
KKR noted the acquisition was its first in Australia and the biggest private equity deal ever in this market.

Brambles separately declared that it was also close to selling Cleanaway's British-based business, a deal which analysts confidently predict will generate up to $US900 million.

Brokers Morgan Stanley and Macquarie Equities both said the price Brambles extracted from KKR for its Australian assets was $150.1 million above expectations.

Brambles shares traded as high as $10.77 after the deal was announced but closed steady at $10.68. Cleanaway Australia is the country's largest waste management operator, with more than 65,000 commercial customers, providing collection services, materials recovery, recycling and disposal.

Industrial Services supplies materials handling and logistics services to the minerals, metals and coal-mining sectors.

Brambles chairman Don Argus said the deal was a significant milestone for the company.
He said Brambles was committed to a strategy in which the business would focus on the company's profitable international pallet and plastic bin hire business CHEP and documents handler, Recall.

The sale is expected to be completed in early July.

Brambles chief executive David Turner said both businesses attracted strong interest from trade and private equity buyers.

Final bids were received late on Friday and were reviewed over the weekend.

Mr Turner said KKR offered a good price and "a very clean sale".

The combined businesses had sales of $863 million and comparable operating profit of $98 million for the year ended June 30, 2005.

The value of the gross assets of the combined businesses were $US557 million ($A756.18 million) at December 31, 2005.

Yesterday's deal will net the logistics giant a pre-tax profit of $US900 million. Since Brambles began to shed non-core businesses late last year, it has accumulated cash proceeds of $US2.44 billion.

A decision taken at that time to restructure the Australian and London listed business has so far seen $US600 million spent on a market share buy-back program.

Brambles has committed to spend up to $US2.2 billion on the buy-back

KKR said the managing director of Cleanaway and Industrial Services in Australia, Chris Berkefeld, and existing management teams in both businesses would continue in their jobs.

Stabiliser reduces need for wrapping pallets Tuesday 20 June 2006 Matthews Intelligent Identification has just been appointed 'exclusive agent' for Holdtite pallet stabilising labels in Australia.

The label comes in standard pressure-sensitive rolls of various shapes and sizes (with backing paper) that can be applied using 'in-line' labellers, such as the Avery Dennison range. Labels applied to shipping cartons can also include printed bar codes and human-readable information, using 'print and apply' in-line labellers.

Holdtite was developed by Australian manufacturer Dalton Packaging. It is simply placed under each carton to stop it from slipping; cartons are stacked as normal. The label’s friction stops the boxes from moving, reducing the stretch film needed from up to 25 wraps down to
about four or five.

Matthews’ Richard Brearley says Holdtite has a non-slip surface, stabilising individual cartons onto a pallet.

"Holdtite pressure-sensitive adhesive labels easily integrate into existing production lines: they are ‘wiped’ or ‘tamped’ onto the carton before palletising, without interruption to the production process," he says.

"This has enormous benefits. Not only does it address the cost issue of the plastic — and the necessary process time and/or labour — it offers tangible environmental benefits. Reducing the volume of stretch film plastic in landfill reduces disposal costs, plus allows manufacturers
to adopt more environmentally friendly practices. It will also be of interest to those pursuing triple bottom line reporting.

"Being paper, it is 100 percent recyclable. Also, because it adheres to the carton there is nothing to dispose of — plus the coating is water based, so it all breaks down to pulp for recycling."